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Professional Procurement to prevent suppression of
irregularities
Project: Strengthening capacities to remedy irregularities in public procurement procedures. No. : HR/2008/IB/FI/04TL
Author: Marcel Stuijts MSc CPD Eric Zwitserloot BA CPD
Date : Sep 19th, 2011
Who am I?
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•Marcel Stuijts, currently Chief Executive Officer BIZOB
-Vice chairman VNG-acia commission- One of the authors of the Guideline Proportionality (ministry of Economic affairs)
•Previous experience: -Chief Executive Officer SIW,-Interim (Procurement) manager several public organisations-Procurement manager Massive lighting
Set up of the presentation
• The situation in Netherlands and how we prevent irregularities in Public Procurement
• Case-study: best practice of joint procurement (organisation) for municipalities in the Netherlands
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Prevent suppression of irregularities on national level in the Netherlands
• Professionalism on– Professional Public Procurement Organisations– Professional behaviour of suppliers.
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How is the Dutch approach
• Procurement guidelines about proportionality
• Procurement guidelines about procedures• A procurement policy document for all the
municipalities• A procurement procedure (hand-book) for
all the municipalities• We lifted procurement back on the agenda
of the politicsAll in stages collaboration with the market!
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How is the Dutch approach
All stages in collaboration with the market!
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Background
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0
5
10
15
20
25
30
Regions
District water board
Public agencies
Government
Municipalities
Public organization
Spend in euro
ATKearny, 1999
Public Sector in the Netherlands and their procurement spend
Needs and wishes
• Contract and procurement methods for• Best-Value Procurement• Incentive agreements• Functional specification• E-Actions• SME supporting procurement• Suppliersmanagement • Innovation in our products en services• Strategic partnerships with suppliers
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So we needed
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Research in the NL: inhabitants and professionalism
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HR/2008/IB/FI/04TL
Scale of MunicipalityInhabitants
Quantity % Procurevolume
Correctlyaccording
EU directive
100.000 en groter 25 6% 47% 60-70%
50.000 tot 100.000 41 9% 23% 30-40%
20.000 tot 50.000 188 42% 22% 20-30%
10.000 tot 20.000 136 31% 7% 0-10%
tot 10.000 53 12% 1% 0-10%
Total 443 100% 100%
Why Joint Procurement organisation? (Murray et al., 2008)
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•Procurement is a badly organised process in most municipalities;• Procurement is too limited in most (small) municipalities;• Professionals at work;• Economics of scale;• Quality of knowledge (databank);• Introducing possibilities for benchmarking;• Better financial results;• To get the optimal relation between commercial companies and the local government;• Stronger contract partner position.
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HR/2008/IB/FI/04TL
Background
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HR/2008/IB/FI/04TL
•Joint procurement organisations for municipality’s has been extended from 1 (2000) till 10 (2010)
•None of those Joint procurement organisations have been liquidated.
•The growth of members has extended till 105 municipality’s of the 400 municipality’s in the Netherlands in the Netherlands.
(VNG)
Benefits of joint procurement collaboration
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Financial procurement costs and profits
Qualitative contracts, multifunctional teamwork, European tenders
Organisational transparent process, integrity, professional procurement
Sustainability focused on environmental and social aspects
BIZOB, do more with less money
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What is BIZOB?
An organisation:
• for executing of (joint) procurement and EU funded projects for the municipalities e.g. for infra-structure works, goods and services;
• that advises municipalities on Public, Private Coloboration cases with suppliers and potential partners;
• that advises municipalities on cases about out-or insourcing of activities;
• that conduct market and product analyses for municipalities.
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Organisation BIZOB
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General Council38 members, two members of each municipality
Chairman: Mr. A.P.M. Veltman
Council 5 members of the General Council
BoardM.A.J. Stuijts MSc
Organisation BIZOB
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CEO M.A.J. Stuijts
Procurement Manager
DEPUTY CEOB.v.Brunschot
Procurement
ManagerI. De Vos
SeniorProcurement
Consultant
Junior
Procurement
Consultant
etcSenior
Procurement
Consultant
Junior
Procurement
Consultant
etc
Management Support
Secretary
Procurement
ManagerH.C.A. Zwitserloot
Senior
Procurement
Consultant
Junior
Procurement
Consultant
etc
Saving possibilities with Joint Procurement:(Murray et al., 2008)
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Specification Selection Contracting Order EvaluationFollow up
Sharing information and
help toolsSharing
information andvolume
Tasks of procurement consultants of BIZOB (Lysons, K., Farrington, B., 2006)
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purchasing function
tactical / initial ordering/ operational
Sourcing Supply
Buying
Procurement
Internal customer
Supplier Ordering Follow up/
evaluation
Expediting and
evaluation
Speci- fication
Contracting Selecting
Purchasing Management Process
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NEEDSFunctional based
ScopePurchase team AIM
Procurement Strategie
1. Analyse procurement situation2. Analyse the internall process3. Financial analyse4. Contract analyse5. Marktet analyse6. Portfolio analyse
Marktet consultation Specification awarding criteriaSelection criteria
PublicationQuestionary documation
SurveyTENDER
assessment
AWARDING
Profesional Procurement
Using the market
The view on a purchasing project
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Exploitation Maintenance Logistics Service
Supply chain
Bus
ines
s un
it
Tow
n
Sub
-reg
ion
Reg
ion
Geographical aspects
Pro
du
ct c
om
par
itiv
e q
ual
ific
atio
ns
The BIZOB-purchase cube
Technical or functional spec.Quantity
TermContract
Executed Joint Procurement projects by BIZOB
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• Transport of students;• Legal consultancy services;• Traffic signs;• Regular training and education• Collect of waste• Commercialization of waste• Office stationary;• Telecom• Flex-people• Social care services• Insurance of public buildings (fire)• Etc.
Executed EU funded (joint) procurement projects by BIZOB
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• Reconstruction of historical church walls;• Design an contracted (& maintenance)
infrastructure high-way between Deurne-Asten (A-67);
• Cycle roads;• Tunnels• Sewerage systems in the outlaying districts• Archeological research
Added Value of Joint-Procurement Organisation: -Procurement expertise;-integrity and independency by executing EU-
procedure.
Financial results
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Failures in Joint Procurement
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•Many meetings, no decisions;
•Dealing with the whole world instead of only the real participants;
•Incompetent program management;
•Lack of procurement expertise;
•Inadequate change management by the introduction.
Critical factor of success
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•Commitment of the local authorities;
• Commitment of the management;
• Teamwork cooperation instead of competition;
• A drive to make the cooperation a success;
• Simple but effective organisational form “mean and lean”.
Political Angle
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•Political “do-it-yourself” procurement and tenders;
• Local suppliers;
• Professional European acting;
• Guarantee of integrity and transparency of procedures;
• Positive effects on town budgets.
• Nepotism, preference for giving orders to ‘friends’ based on relationship.
Alignment & Accountability
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Sourcing
Commune objectives Goals determined by the council
(SRM = Supplier
Relationship Management )
S t rategic
Operational
Tactical
S.R.M.
Strategic Alignment but alsoAccountability
Strategic
Procurement
(Mintzberg et al. , 1998)
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Professional (joint) Public Procurement, an opportunity
to prevent suppression of irregularities
But also for.................
’How to do more with less”
Thank you for your attention
References
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ATKearney, (2004), ‘Assessment of Excellence in Procurement’, [online], available: http://www.atkearney.com/main.taf?p=5,3,1,115,1.
Dimitir, Piga, Spagnolo, (2006): Handbook of Procurement, pp.347-360 and pp. 3-142, Cambridge University Press.
Gelderman, C.J., Ghijsen P.W.Th, Brugman M.J, (2006), ‘Public procurement and EU tendering directive-explaining non-complience. International Journal of Public Sector Management; Volume: 19
Keough, M., (1993), ‘Buying your way to the top’, The Mc Kinsey Quaterly, No 3, pp. 41-62.
Lysons, K., Farrington, B., (2006): Purchasing and Supply Chain Management, pp. 4- 106, 243 – 250, 419 – 420, Pearson Education, Prentice Hall.
Mintzberg, H., Ahlstrand, B., Lampel, J., (1998), ‘Strategy Safari’, Prentice Hall, 1998, pp. 1 – 21.
Monczka, R.M., Trent, R.J. ‘Global sourcing A Development approach’ , International Journal of Purchasing and Materials Management, (27:2), Spring 1991, pp. 2-8.
Murray, G., Rentell, J., Peter G., David Geere, (2008), ‘Procurement as a shared service in English local government’, International Journal of Public Sector Management, Vol 21, No. 5, pp. 540 – 555.
Nevi, (2004), ‘Dutch expert centre for Professional Procurement’
Trepte, P., (2004), Regulation Procurement, Oxford University Press, pp. 57 – 62, pp. 120 – 132, 150 pp. 392.
VNG, the Association of Netherlands Municipalities
Weele, van, A.J.(2005), ‘How purchasing and supply management develops over time’, pp.92-98, Purchasing & Supply Chain management, Thomsom.
Questions
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